How to Buy|Purchase Bitcoin Using Various Payment Processors
You might have thought of ways to purchase bitcoin using traditional payment methods. We will talk about some of the most popular payments available and the alternate methods of purchasing Cryptocurrecies like Bitcoin.
How to Purchase Bitcoin Using PayPal
You can also buy Bitcoin through PayPal Holdings, Inc., a payment processor (PYPL). Using PayPal, you can buy bitcoin in two ways. The first and most convenient method is to buy cryptocurrencies with a PayPal account linked to a payment method like a debit card or a bank account. The second option is to purchase cryptocurrencies from a third-party provider using the funds in your PayPal account. Because few third-party sites allow users to purchase Bitcoin using the PayPal button, this option is not as convenient as the first.
Bitcoin, Ethereum, Litecoin, and Bitcoin Cash are the four cryptocurrencies that can be purchased directly through PayPal. Residents of all states can use their existing PayPal accounts or create new ones, with the exception of those who live in Hawaii. You can also use the “Checkout with Crypto” feature to buy products and services with your cryptocurrencies.
The following information is required to open a crypto account with PayPal: name, physical address, date of birth, and tax identification number.
It is not possible to buy Bitcoin with a credit card through PayPal. PayPal will display a price for the cryptocurrency during the purchase process. However, due to the volatility of cryptocurrency markets, that price is subject to rapid change. It’s a good idea to make sure you have enough money in your bank account to cover the cost of the purchase.
When you buy bitcoin directly from PayPal, it profits from the crypto spread or the difference between bitcoin’s market price and the USD-to-cryptocurrency exchange rate. In addition, each purchase is subject to a transaction fee. The amount of these fees is determined by the purchase price. For purchases between $100 and $200, for example, a flat fee of $0.50 is charged. The fee is then calculated as a percentage of the total dollar amount. For crypto purchases between $100 and $200.7, for example, a fee of 2% of the total amount is charged.
One drawback of buying cryptocurrencies with PayPal is that you can’t transfer them outside of the payment processor’s platform. As a result, you won’t be able to move your bitcoin from PayPal’s wallet to an external crypto wallet or your personal wallet.
Another disadvantage of using PayPal is that only a small number of exchanges and online traders accept the payment processor as a method of payment. eToro is one of the few online trading platforms that accept PayPal for bitcoin purchases.
Using a Credit Card to Purchase Bitcoin
The procedure for purchasing Bitcoin with credit cards is similar to that for purchasing Bitcoin with debit cards or via automated clearing house (ACH) transfers. You must enter your credit card information and authorize the transaction with the exchange or online trading firm. Purchasing bitcoin with a credit card, on the other hand, is generally not a good idea. This is due to a number of factors.
To begin with, not all exchanges allow credit card purchases because of the associated processing fees and risk of fraud. It’s possible that their decision is in the best interests of customers. This is due to the fact that credit card processing can tack on extra fees to such transactions. As a result, you will have to pay processing fees in addition to transaction fees, which the exchange may pass on to you.
The second reason is that using a credit card can be costly. Bitcoin purchases are treated as cash advances by credit card companies, which charge high fees and interest rates. Purchases of cryptocurrencies, for example, are treated as cash advances by American Express and Chase. As an example, if you buy $100 worth of Bitcoin with an American Express card, you’ll pay $10 (the current cash advance fee for such transactions) plus a 25% annual percentage fee. Furthermore, the credit card company places a monthly limit of $1,000 on bitcoin purchases.
Obtaining a Bitcoin Rewards credit card is an indirect method of purchasing bitcoin with a credit card. These cards work in the same way as a regular rewards credit card, except that the rewards are in bitcoin. As a result, they put the money they get back from purchases into bitcoin. The BlockFi Bitcoin Rewards Credit Card is an example of a Bitcoin Rewards card. 9 However, keep in mind that the annual fee on these cards may be high, and there may be additional costs associated with converting fiat currencies to crypto.
Although exchanges such as Coinbase and Binance are still among the most popular ways to buy Bitcoin, they are far from the only option. Here are some other options for purchasing cryptocurrency.
Purchasing Bitcoin in Other Ways
Bitcoin ATMs are similar to bitcoin exchanges that you can visit in person. Individuals can use cash to buy bitcoin, which is then transferred to users’ online wallets. Bitcoin ATMs have grown in popularity in recent years, to the point where retail behemoth Walmart Inc. (WMT) has started a pilot program to allow customers to buy bitcoin. Coin ATM Radar can assist in locating nearby machines.
ATMs, on the other hand, are an expensive way to buy cryptocurrency. A purchase fee and a conversion fee from a fiat currency to bitcoin are both charged when buying bitcoin at an ATM. In comparison to other options, both fees are quite high. For example, the global average purchase fee at Bitcoin ATMs is 8.4 percent (of the purchase amount), and the worldwide average sale fee is 5.4 percent.
Unlike decentralized exchanges, which anonymously match buyers and sellers and facilitate all aspects of the transaction, some peer-to-peer (P2P) exchange services allow users to connect directly. An example of such an exchange is LocalBitcoins. Users can post requests to buy or sell bitcoin after creating an account, including information about payment methods and price. Users then search through a list of buy and sell offers, selecting trade partners with whom they want to do business.
Some aspects of the trade are made easier by LocalBitcoins. Although P2P exchanges do not provide the same level of anonymity as decentralized exchanges, they do allow users to compare prices. Many of these exchanges also have rating systems, which allow users to assess potential trading partners before making a transaction.
Brokerages in the mainstream
Due to the ambiguity surrounding the regulatory status of cryptocurrencies, only a few mainstream brokerages offer bitcoin purchase and trading capabilities. One exchange that offers crypto trading is Robinhood Markets, Inc. (HOOD), a popular app among retail investors. It makes money from the payment for order flow, passing on its trading volume to other trading platforms or brokerages, and charges zero percent commission for cryptocurrency trades and purchases.
Although the lack of a commission fee may be appealing to newcomers, there are a few caveats to that offer. To begin with, Robinhood lacks the breadth of features and coins that prominent crypto exchanges such as Coinbase provide. As of October 2021, Robinhood allows users to trade seven cryptocurrencies on its platform: Bitcoin, Bitcoin Cash, Ethereum, Bitcoin SV, Dogecoin, and Ethereum Classic. 11 Coinbase, on the other hand, allows you to trade over 100 different cryptocurrencies. 12 During trading, the exchange also provides a variety of order types to reduce risk and offset losses.
A hosted wallet is also not available on the Robinhood platform. As a result, if you want to buy cryptocurrencies through Robinhood, you’ll have to account for the cost of an online wallet.
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